To "get a good harvest and get a good price", coffee businesses need credit incentives

Coffee prices are high, so businesses need capital to produce on time. Photo: ST

Being Seasonal goods but difficult to borrow because of collateral

The Vietnam Coffee and Cocoa Association said that Vietnam's export coffee prices are increasing continuously and it is expected that the export value will reach more than USD 4.2 billion in 2023. Nine months of 2023, exports Vietnam's coffee reached 1,266 million tons, worth USD 3.16 billion, down 7.3% in volume but up 1.9% in value over the same period last year.

Ms. Ha Thu Giang, Director of the Credit Department for Economic Sectors (SBV), said that in the Central Highlands region, credit for agricultural and rural development is always invested by credit institutions with outstanding loans reaching more than VND 297 trillion, an increase of 3.15% compared to the end of 2022 (national growth is 4.37%), accounting for over 58% of the region's total outstanding debt. Notably, credit for key and strong agricultural products of the region has good growth, two-thirds of strong products have a higher growth rate compared to the same period in 2022 (coffee and rubber), of which outstanding coffee loans reached over VND 76 trillion, an increase of 7.06% compared to the end of 2022 (the same period in 2022 decreased by 2.4%).

However, sharing about difficulties related to capital for exported coffee products, Ms. Tran Thi Lan Anh, Director of Vinh Hiep Coffee Company Limited said that businesses need to ensure capital to purchase coffee for farmers, ensuring coffee production and export right from the beginning of the crop year, regulating business activities as well as providing good support for farmers to develop coffee in a sustainable way.

Ms. Lan Anh stated that small and medium-sized enterprises are facing many difficulties in accessing loans. Currently, small and medium-sized enterprises are mainly borrowing capital in the form of real estate mortgages. Borrowing capital by mortgaging assets like this causes private businesses to only be able to borrow very limit ed amounts of money while purchasing coffee is very urgent because this is a seasonal agricultural product. Businesses do not have enough capital to ensure purchases and regulate plans, leading to price pressure because large volumes of coffee harvested during the main season are sold in a very short time.

Also on this issue, Mr. Ta Quang Phu, Director of Quang Trieu Co., Ltd. (Dak Nong) said that currently coffee businesses in Dak Nong province are difficult to find capital because of suddenly rising coffee prices while businesses lack collateral.

Enterprises must be financially transparent and restructure production

To compete with foreign-invested enterprises, representatives of coffee producing and exporting enterprises emphasized that banks need to have credit granting policies for each industry, especially agricultural export products including coffee or to leading businesses in the industry with sustainability in terms of interest rates, credit growth limit s (room), collateral (commodity) policies

In addition, Mr. Ta Quang Phu also suggested considering implementing loan products based on production and business plans including: contracts, receivables, cash flow, and goods so that businesses can access resources of unsecured loans and proactive capital; consider lending based on business reputation, buyer’s reputation and receivable insurance. Representative of Dak Uy Coffee Company proposed that the State Bank introduce preferential interest rate policies with the coffee replanting program, helping businesses access long-term capital at low interest rates, bringing stable productivity and ensure capital sources to repay bank debt.

However, many businesses also admit that the current difficulties in production and business are not due to access to capital but due to many other factors, such as increased costs of input materials, decreased orders, and large inventories, outdated machinery and technology, unimproved management capacity...

Ms. Ha Thu Giang acknowledged that credit investment to serve the development of key agricultural products in the region is facing many difficulties and challenges. Specifically, business efficiency in agriculture - a strong sector of the region is still low in the context that Vietnamese agricultural products are increasingly competing fiercely with agricultural products in the region and around the world; cooperation and application of science and technology in agricultural production are still limit ed and are affected by natural disasters and epidemics.

Along with that is the risk of breaking the value chain of production - purchasing - processing - exporting agricultural products; potential and causing risks of congestion and stagnation of agricultural products in circulation. Furthermore, the issues of trade promotion, branding, and geographical indications for Vietnam's export products have not been adequately invested, reducing the competitiveness of Vietnam's agricultural products in the international market. Policies on regional integration, encouraging public-private cooperation, and policies on enterprise development, especially small and medium-sized enterprises, have been implemented but have not met expectations.

Therefore, this issue needs cooperation and support from the authorities. Furthermore, according to bank representatives, in order to be ensured that banks feel secure in lending unsecured loans, coffee businesses need to increase financial disclosure and transparency; Along with that, we must promote restructuring, diversify consumer markets, and actively transform digitally...